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Commodity Market Meltdown

Thursday, 7 Feb 2008 | 6:54 PM ET

If a meltdown in commodity stocks is coming, what’s the best way to trade it?

Joe Terranova, Director of Trading at MBF Clearing Corp joins the panel for this conversation. Following is a synopsis of his main points.

Energy Market

Refining margins should improve in the coming quarters, according to Terranova. He recommends getting long refiners such as Valero (VLO) and Frontier (FTO). Also check out Apache (APA) for nat gas.

  Price   Change %Change
COP
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VLO
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I like ConocoPhillips (COP), adds Pete Najarian.

Crude Oil & Lumber Charts

Historically, oil and lumber have moved in opposition to each other, observes Terranova. As a trader, if crude breaks down I’m going to buy lumber. Check out Weyerhaeuser Company (WY), he counsels.

  Price   Change %Change
BASCX
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Options action suggests to me Arch Coal (ACI) could move higher, says Pete Najarian.

Tomorrow's Trades #2
Eyeing the best trades as the global slowdown weakens demand for commodities, with the Fast Money traders.

Precious metals

I think copper is bottoming out, says Terranova. I recommend being long copper and short gold by buying Southern Copper (PCU) andshorting Barrick (ABX).



  Price   Change %Change
YNP
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Precious metals

I think copper is bottoming out, says Terranova. I recommend being long copper and short gold by buying Southern Copper (PCU) andshorting Barrick (ABX).

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Trader disclosure: On Feb.6, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (YHOO), (DIS), (ATVI), Najarian Owns (AIG) Puts; Najarian Owns (AAPL) Calls, (NYX) Calls, (SKS) Calls; Najarian Owns (BIIB), (C), (CSCO), (MS), (MSFT), (YHOO), (AMR), (CTSH); Finerman Owns (GS); Finerman's Firm Owns (AEO), (BR), (DSW), (JCP), (KSS), (MO), (MSFT), (PLCE), (SKS), (SUN), (TSO), (WMT), (YHOO); Finerman's Firm Is Short (IJR), (IYR), (IWM), (SPY), (MDY), (SPG); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm And Finerman Own (FLS) (HD); Finerman's Firm Owns (CROX) And (CROX) Calls, Finerman Owns (CROX); Finerman's Firm Owns Shares Of Royal Bank of Scotland Group plc; Finerman's Firm Owns Shares Of HBOS plc; Finerman's Firm Is Short The Pound; Terranova Owns Crude Oil; Vivendi Owns 20% Of NBC Universal, The Parent Company Of CNBC

  Price   Change %Change
ABX
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SCCO
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WY
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COP
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APA
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VLO
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  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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